FedEx sues US government over export rules in Huawei case

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DALLAS: A lawsuit filed by FedEx against the US government over export rules follows a dispute over diverted shipments that were intended for Huawei Technologies, the Chinese telecommunications-equipment giant.

The lawsuit challenges changes to export rules designed to keep technology out of the hands of entities or people that the US government considers potential risks to national security.

In May, the US government added Huawei to a list of entities and people barred from receiving US technology without a special license from the Commerce Department. Shortly after that, Huawei complained about FedEx diverting several company shipments.

FedEx apologised to Huawei for the missed deliveries, which it said were accidental. However, China announced that it was investigating FedEx over the matter.

The delivery company complains that the rules “essentially deputise FedEx to police the contents of the millions of packages it ships daily even though doing so is a virtually impossible task.”

FedEx Corp sued the Commerce Department and Commerce Secretary Wilbur Ross in federal district court in Washington on Monday. It asked the court to block the government from enforcing export controls against it.

The Commerce Department said in a statement that it has not reviewed the complaint but looks forward to “defending our role in protecting US national security.”

FedEx Chairman and CEO Fred Smith said the lawsuit was broader than “the Huawei issue … which was three packages out of 15 million packages a day.”

“The Huawei packages were only peripherally involved in this lawsuit that we filed, and in fact, it goes back many, many years,” Smith said Tuesday on a conference call to discuss the company’s quarterly results with analysts. He said the final straw was Friday when the Commerce Department added five more entities covered by the same rules.

On Sunday, the Huawei dispute flared again when the Chinese company complained on Twitter about FedEx blocking the shipment of a Huawei phone from the United Kingdom to the US Smith called it a mistake by a junior employee.

“We are expected to be policemen for these export and import controls, and there are about 1,100 entities now on this list,” Smith told Fox News. If the company makes a mistake on any shipment, he said, it can be fined $250,000 per piece without having a trial or due process of law.

In its lawsuit, FedEx said most packages are sealed when customers drop them off, making it impossible for the company to know the contents. FedEx said it compares names and addresses of shippers and recipients against the government’s watch list of restricted groups and people.

FedEx wants a so-called safe harbour — a provision that would protect it from being penalised if it didn’t know that a particular shipment would violate the export rules.

Meanwhile, the tension between the US and China over trade, tariffs and the export rules continues to rise. Huawei filed a lawsuit in federal court in Texas to challenge the constitutionality of a law that bars the government and its contractors from using Huawei equipment.

FedEx has run afoul of export controls before. Last year, the company agreed to pay $500,000 to settle government allegations that it violated the rules with some shipments to flagged entities in France and Pakistan.

Memphis, Tennessee-based FedEx released its latest financial results Tuesday reflecting weakness in its core express business. The company also indicated its profit in the coming year would be squeezed by slower global economic growth and a move to drop an Amazon delivery contract.

FedEx shares were down for a second straight day. They lost $4.92, or 3.1%, to close at $155.98 after falling 2.7% on Monday.

The post FedEx sues US government over export rules in Huawei case appeared first on The Himalayan Times.

Written by Kriti Joshi
This news first appeared on https://thehimalayantimes.com/business/fedex-sues-us-government-over-export-rules-in-huawei-case/ under the title “FedEx sues US government over export rules in Huawei case”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.